The Hopi and the Navajo take on the country's largest
coal miner over scarce and sacred water

BY

MARGUERITE
MICHAELS/MOENKOPI, ARIZ.

Old Oraibi, which dates its origins to about 1150, is
considered the oldest continuously inhabited settlement in the U.S., and
when you visit the haunting mesas that surround it, you quickly see why
people would gather at this spot. It's got water. Or rather it had
water. The ancient wells are drying up.

The Hopi Indians have hung eagle prayer feathers in
threatened wells and springs across their sprawling reservation in
northeastern Arizona in hope that the water will return and that the
drought of recent years will break. But many believe a shortage of rain
is only part of the problem.

Gilbert Naseyowna, 76, has been tending sheep and
cattle all his life but has only recently had to haul water to his
livestock above his village of Moenkopi, where a healthy spring used to
flow. "That's why I know the water has disappeared," he says
simply. "Something's wrong with the aquifer. I think it's the
pumping."

Naseyowna and many of the 11,156 other residents of
the reservation, along with a roughly equal number of neighboring
Navajo, blame their dry springs and receding wells on Peabody Energy,
which pumps 1.3 billion gal. of pristine water a year--enough to supply
a community of 4,000 households--out of an ancient sandstone aquifer
that lies beneath the Hopi and Navajo lands. Peabody claws coal out of
land leased from the tribes at a site known as Black Mesa and pulverizes
it into powder. The company then mixes the coal with water and pumps it
through a pipeline 273 miles west to the Mohave Generating Station,
which produces electricity for 1.5 million homes in nearby Las Vegas and
Southern California.

Peabody, the world's largest private coal company, has
used the slurry pipeline to move its coal since 1970. Traditionalists in
the Hopi tribe have complained that both the coal mining and water
pumping violate their religious obligation to act as guardians of the
land and its water, which Naseyowna calls "the blood of the
earth." The dispute has heated up in recent months as concern over
the springs and wells has grown--and as deadlines approach for key
negotiations between Peabody and the Mohave power plant.

Peabody's fuel-supply contract with the Mohave
Generating Station ends in 2005. But the power plant is required to
start installing scrubbers on its smokestacks before then, and its
executives do not want to spend $400 million on that project unless the
Hopi water problem is resolved. Either Washington gives Peabody
permission to pump aquifer water for the life of the mine, which could
be an additional 15 years, or an alternative water source must be found
for the slurry pipeline. "We have to decide by next year,"
says Nader Mansour, manager for environmental regulations for Southern
California Edison, one of the owners of the Mohave plant. "We're
looking at switching to natural gas."

Peabody executives have stepped up efforts to reach an
agreement since June, when CEO Irl Engelhardt, 54, met with Hopi and
Navajo leaders in Flagstaff, Ariz. "We're not happy about the
continuing controversy over the water," says Fred Palmer, a Peabody
executive vice president. "We'd like to see it resolved."

The Natural Resources Defense Council last year funded
a hydrological study of the aquifer that found the water level in some
of the Hopi wells had fallen 100 ft. since mining began, and the flows
from most of its springs had been reduced 50%. Peabody cites its own
extensive studies and argues that the water it draws from the aquifer is
comparable to dipping "half a beverage can out of a 55-gal.
drum." But Palmer says that Peabody "does accept that the
aquifer has religious significance."

The aquifer and the coal also have huge economic
significance for the tribe. Payments from Peabody account for
three-fourths of the tribal council's $19 million annual budget, which
pays for services like schools and health clinics and salaries for about
500 council employees. Hopi tribal chairman Wayne Taylor Jr. bluntly
concedes that "basically, we don't have an economy. We've become
dependent on the Peabody income."

Taylor has been working with Peabody for years to try
to find another source of water for the slurry pipeline--perhaps Lake
Powell, some 60 miles northwest on the Colorado River. But that solution
would cost about $106 million, and powerful interests oppose any further
claims on the Colorado's waters.

Why not just ship the coal by rail to the Mohave power
plant--the same way Peabody already ships coal from Black Mesa to a
power plant near Lake Powell? There is no direct rail line to the Mohave
plant, and the cost of building one, says Peabody's Palmer, "would
be prohibitive."

Complicating efforts to settle the water dispute is
its sordid history. The initial deals between Peabody and the Hopi
during the 1960s, on much worse terms than similar deals elsewhere, were
negotiated by a lawyer, John Boyden, who died in 1980. He claimed to
represent the controversial tribal council of the day, which paid him a
$1 million fee--even as he secretly represented Peabody's interests.
Says University of Colorado law professor Charles Wilkinson: "It's
as outrageous a scenario as we've seen in Western resource
development."

Peabody's current management says it wants a deal that
is fair to all parties. To achieve that, however, Palmer says, "we
need help from Congress and the White House." In both places,
Peabody should be able to command a respectful hearing. It contributed
$250,000 to the Republican National Committee during the 1999-2000
campaign, and Engelhardt gave $100,000 to the Bush-Cheney Inaugural
fund.